Volkswagen Group has agreed to a new pay deal with IG Metall that amounts to an increase of over 8% in two stages.

The deal covers some 125,000 employees, which will increase pay in two stages, by 5.2% in June 2023 and 3.3% in May 2024, according to media reports.

The agreement also includes an inflation-adjusted, tax-free bonus of EUR2,000 in the first quarter of 2023, and EUR1,000 in early 2024, the company has reportedly said.

In recent media interviews, VW board members have stressed the importance of cost control for the company. However, a wage deal with Germany’s largest labour union offers the company a high degree of stability into 2024.